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Hong Kong Again Top In World Competitiveness Rankings

by Ulrika Lomas, Tax-News.com, Brussels

04 June 2012


The International Institute for Management Development (IMD), in its recently-issued World Competitiveness Yearbook 2012, has ranked Hong Kong as the world's most competitive economy for the second consecutive year.

The rankings are said to measure how well 59 countries around the world manage their economic and human resources to increase their prosperity. Last year, Hong Kong and the US had the same score and were both rated by IMD as number one. This year Hong Kong's score has surpassed the US, which is now in second place.

Among the competitiveness factors assessed, Hong Kong continues to take the lead in government efficiency and business efficiency, and remains fourth in economic performance. Hong Kong’s Financial Secretary, John C Tsang, said: "We welcome the IMD's high regard of Hong Kong as the world's most competitive economy for the second consecutive year.”

"Hong Kong is highly competitive vis-à-vis most other economies in the world, especially in terms of government efficiency, business efficiency and macroeconomic performance,” he continued. “In particular, openness to trade, rule of law, a business-friendly environment, sound fiscal policy, mature institutional framework, well-functioning financial market and global city image are key factors underpinning Hong Kong's success.”

"We will continue to enhance Hong Kong's competitiveness on various fronts,” he confirmed, “to strengthen our position as a global city."

The IMD itself commented that, “despite all its setbacks, the US remains at the centre of world competitiveness because of its unique economic power, the dynamism of its enterprises and its capacity for innovation”.

In the opinion of Professor Stephane Garelli, director of IMD's World Competitiveness Center, "US competitiveness has a deep impact on the rest of the world because it is uniquely interacting with every economy, advanced or emerging. No other nation can exercise such a strong ‘pull effect’ on the world. Europe is burdened with austerity and fragmented political leadership and is hardly a credible substitute, while a South-South bloc of emerging markets is still a work in progress.”

The most competitive nations in Europe are Switzerland (3), Sweden (5) and Germany (9), which have export-oriented manufacturing and fiscal discipline. Meanwhile, Ireland (20), Iceland (26) and Italy (40) look better equipped to bounce back than Spain (39), Portugal (41) and Greece (58), which, the IMD said, continue to scare investors.

The IMD also reflected that emerging economies are not yet immune to turmoil elsewhere. China (23), India (35) and Brazil (46) have all slipped in the rankings, while Russia (48) climbed only one place. All Asian economies have declined apart from Hong Kong (1), Malaysia (14) and South Korea (22). Latin America also had a tough year, with every nation falling except Mexico (37).

Taiwan (7) moved down one notch, largely due to its economic performance, but still remained one of three Asian countries in the top 10 with a competitiveness ranked way ahead its neighbours who are also its major competitors - South Korea, China and Japan.

"The recession has made the world economy more fragmented and diverse than ever, forcing companies to operate several parallel business models," added Professor Garelli. "Emerging economies are relying on domestic demand and national champion companies to insulate themselves from economic turmoil, while the ‘submerging’ developed economies are turning to re-industrialization. In both cases, economic nationalism is back and protectionism is tempting."

TAGS: Russia | economics | business | Iceland | India | Ireland | Portugal | fiscal policy | law | China | Mexico | Taiwan | offshore | Brazil | Germany | Greece | Hong Kong | Italy | Korea, South | Malaysia | Spain | Sweden | Switzerland | trade | Japan

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